Gigabit passive optical networking (GPON) is a fiber-to-the-home (FTTH) / fiber-to-the-building (FTTB) technology. Although vendors say it can also be used in fiber-to-the-curb (FTTC) and mobile backhaul applications, the plain fact is that large operators around the world must begin building out fiber to the basement or the home in order for volume shipments of GPON central office equipment and, particularly, customer premises equipment (CPE) to lift off, and bring the volume-related cost reductions that will further increase the attractions of the technology.

A challenge for any fiber access equipment vendor community, of course, is that the fundamental business case for FTTH really depends on the balance between revenues from new services supported by the investment, and the cost of digging; the equipment is a relatively small part of the total cost. This factor has caused some delays to FTTH rollouts and plans in some markets – notably Europe. So long as big operators believe subscribers will be happy with less than 50 Mbit/s and put fiber only to the cabinet, with some flavor of DSL for the final connection, GPON's market opportunity will be constrained.

However, operators everywhere know that there is no sense in laying new copper – and in some markets, copper infrastructure is either unsuitable for the next generation of services, or is stolen for its raw material value. FTTH will happen, but when is still the question for GPON. Excessive delay could mean that future PON technologies will begin to make more sense. Several vendors are developing 10GPON equipment now, and WDM-PON is an active area of research (though standards are some years away). Nokia Siemens Networks has already decided the GPON window of opportunity has closed, at least for the sort of large contracts the company is targeting.

So why are we still optimistic? North American GPON deployments continue pretty much as expected, despite the greenfield slowdown; there have been some sizeable contracts, for instance in the Middle East. In the Far East, the relaxation of TV content distribution regulation means GPON's star is rising compared with Ethernet PON (EPON) – its current, more limited, PON technology competitor. Elsewhere in Asia, large operators in India have identified GPON as the technology of choice for future FTTH deployments, and GPON vendors report interest from Latin American operators. There is no evidence of GPON being significantly displaced for FTTH/FTTB by point-to-point/active Ethernet.

In short, we believe there will be new large GPON projects worldwide, and the North American market conditions (generous rural subsidies, strong competition from cable operators, and a regulatory environment supporting infrastructure build) will not become necessary conditions for a business case. While we have scaled down and pushed back our forecasts for the GPON equipment market compared to 18 months ago, we still believe it will be a $1 billion annual market soon.

The Light Reading Insider report, "GPON: Still Waiting for Lift-Off," explores and analyzes the GPON equipment sector, including a five-year global market forecast. It provides an overview of recent GPON developments in markets around the world, indicating likely major areas of opportunity. It reviews the impact on the GPON market of current economic and regulatory conditions – in particular the continuing uncertainty over the business case for all forms of FTTH – and assesses progress toward interoperability and development of the next generation of PON technologies. The report includes a competitive analysis of GPON offerings from 15 different suppliers.
 

Source:Light Reading